I'm a stepparent. Is my financial information listed on the FAFSA?
If you're a stepparent and your spouse is the one filling out the FAFSA (i.e., your spouse is the custodial parent of the college-bound child), then your income and assets will need to be reported on the FAFSA. This rule applies as long as you are married on the date the custodial parent fills out the FAFSA. So even if you weren't married the previous year--the year for which the FAFSA wants financial information--you will still need to list your income and assets if you are married on the date the custodial parent fills out the FAFSA.
What if you have a prenuptial agreement that absolves you from having to contribute to your stepchild's college costs? It doesn't matter. In its financial aid determination, the federal government ignores prenuptial agreements and considers a stepparent a financial resource, even if the stepparent is unwilling to provide financial support for college. The government is not bound by a private prenuptial agreement.
Bottom line: a stepparent's financial resources are counted on the FAFSA if the stepparent is married to the custodial parent on the date the FAFSA is completed, and a noncustodial parent's financial resources are not counted (except to the extent they are reported as child support and/or alimony by the custodial parent).
However, the custodial parent/stepparent household may be eligible for some tax relief. If the custodial parent claims the child as a dependent on his or her tax return and files a joint return, then the custodial parent may be able to take advantage of the American Opportunity tax credit.
The American Opportunity credit (formerly the Hope credit) is worth up to $2,500 per year for the qualified tuition and related expenses paid during the first four years of an undergraduate student's college education, provided the student is attending school on at least a half-time basis. To qualify for the full $2,500 credit in 2011, your modified adjusted gross income (MAGI) must be below $160,000 (the threshold for married taxpayers filing jointly; the credit is not available for married taxpayers filing separately). A partial credit is available if your MAGI is between $160,000 and $180,000.